The Clipboard: Fraud allegations compound Iraq accounting investigation

From an article¹:

U.S. civilian authorities in Iraq cannot properly account for nearly $100 million that was supposed to have been spent on reconstruction projects in south-central Iraq, government investigators said Wednesday.

There are indications of fraud in the use of the $96.6 million, according to a report by the Special Inspector General for Iraq Reconstruction. A separate investigation of possible wrongdoing continues.

More than $7 million of the total is unaccounted for, the report said. An additional $89.4 million in payments do not have the required supporting documents.

The report accused civilian contract managers of "simply washing accounts" to try to make the books balance. Staffing shortages and the quick turnover of those responsible for the cash contributed to the problems, the report said.

Col. Thomas Stefanko, the official now in charge of the program, wrote the investigators that he agreed with their conclusions. Stefanko said his office had corrected or was in the process of fixing or investigating the problems identified in the report. (link)

Is there any way in which Iraq is not marked by incompetence, fraud, and disaster?

---

Complete text of the article, Fraud allegations compound Iraq accounting investigation, by Matt Kelley

U.S. civilian authorities in Iraq cannot properly account for nearly $100 million that was supposed to have been spent on reconstruction projects in south-central Iraq, government investigators said Wednesday.

There are indications of fraud in the use of the $96.6 million, according to a report by the Special Inspector General for Iraq Reconstruction. A separate investigation of possible wrongdoing continues.

More than $7 million of the total is unaccounted for, the report said. An additional $89.4 million in payments do not have the required supporting documents.

The report accused civilian contract managers of "simply washing accounts" to try to make the books balance. Staffing shortages and the quick turnover of those responsible for the cash contributed to the problems, the report said.

Col. Thomas Stefanko, the official now in charge of the program, wrote the investigators that he agreed with their conclusions. Stefanko said his office had corrected or was in the process of fixing or investigating the problems identified in the report.

Paper trail

The money at issue is from proceeds from Iraqi oil sales and seizures from Saddam Hussein's regime. Distribution of the money was handled first by the U.S.-run Coalition Provisional Authority from 2003 to June 28, 2004. After that, the money was overseen by the Joint Area Support Group-Central, which is managed from the U.S. Embassy in Baghdad.

Part of the problem was a last-minute push to spend millions on reconstruction projects before the interim Iraqi government took over, the report said. One agent got $6.75 million in cash a week before the handover with the expectation that the money would be spent before the Iraqis took power.

Controls over the cash were so lax that two of the agents hired to distribute the money were allowed to leave Iraq before they had accounted for all of it, the report said. Between them, those two had been given more than $1.4 million in cash that remains unaccounted for, the report said.

A different agent failed to provide proper documentation for more than $12.4 million in spending but had his accounts cleared by his supervisors, the report said. Yet another agent kept distributing money for three weeks after his authority was revoked, the report said. Told that $1,878,870 was missing from his account, the agent delivered exactly that amount to his supervisors three days later.

reference=http://www.startribune.com/stories/484/5386244.html